Capital markets are a cornerstone of the Philippines’ economic development. By directing capital to where it is most needed, they enable businesses to expand, create jobs, and invest in innovation that raises productivity — the foundation for lasting improvements in Filipino living standards.
At the same time, well-functioning markets channel household savings into productive enterprises, enabling ordinary Filipinos to participate in wealth creation and share in the country’s growth.
Strengthening the Philippine capital markets is therefore not only about fueling economic progress but also about broadening financial inclusion and ensuring that prosperity reaches more people.
The Securities and Exchange Commission (SEC) is more than a registrar of corporations. It is the government agency entrusted with developing the capital market and protecting investors.
It is a sobering fact that the Philippines is trailing behind its ASEAN neighbors in terms of number of listed corporations and volume of trading. Vietnam, whose stock exchange came long after the Philippine Stock Exchange (PSE), has already surpassed the PSE in terms of listed firms and trading volume. This underperformance highlights the urgent need for reforms.
Other ASEAN markets demonstrate the benefits of strong governance. Singapore, for example, has built a highly regulated stock exchange where the SGX board, including its chairman, is composed of a majority of independent directors.
The Philippines can draw lessons from Singapore by ensuring that the PSE is likewise led by a majority of independent directors who are not associated with any broker-dealers. This structure would help prioritize reforms, transparency, and inclusive growth over narrow broker interests, while safeguarding the integrity of the exchange.
The PSE should be governed by investors and entrepreneurs, those who drive growth, rather than by brokers or individuals directly associated with brokerage firms. A well-functioning exchange relies on investor confidence, which can only be sustained if governance structures are seen as fair, transparent, and free from undue influence.
Allowing broker-affiliated individuals to sit on the board or to control the PSE creates an inherent conflict of interest, as they may prioritize the interests of their firms over those of the investing public. This undermines trust, discourages both domestic and foreign investors, and ultimately constrains the flow of funds into equities and debt instruments.
The presence of broker-directors also affects the quality of listings. Companies are less likely to tap the stock market if they perceive its governance to be skewed toward broker interests. Many instead turn to banks, private equity, or overseas exchanges, undermining the effort to broaden and deepen the domestic capital market.
While broker-directors bring valuable industry expertise, the PSE board must be dominated by independent directors and reinforced by rigorous regulatory oversight. Without this, conflicts of interest will persist, investor confidence will continue to erode, much needed reforms will stall, and the Philippine capital markets will be unable to fulfill their critical role as engines of sustainable growth, financial inclusion, and broad-based prosperity for all Filipinos.
(The views and opinions expressed in this article are solely those of the author. This article is for general information and educational purposes, and not offered as, and does not constitute, legal advice or legal opinion.)